corporAID: Two years ago that took place in Vienna high-level forum Africa-Europe instead, the focus was on economic cooperation. Also ins Government program this aspect has found its way. How is the partnership with Africa looking at the corona crisis?
Engelberg: Both Chancellor Kurz and Foreign Minister Schallenberg have identified partnership with Africa as an issue. However, the exceptional year 2020 inevitably deprived this and many other topics. However, the approach should remain the same, namely to rely more on economic cooperation between Austria and the EU on the one hand and the African states on the other. Because this is not only how you help the African countries the most in the long term, in my perception it is also what most Africans want. That is not to say that traditional development cooperation is no longer needed - it is more about further developing into a real partnership. I hope that after the end of the corona crisis we will be able to focus more on this topic again. But even now there is progress: The foreign disaster fund has been doubled from 25 to 50 million euros and, for the first time, a special representative for humanitarian aid has been appointed in the Foreign Ministry. But that's just disaster relief.
Bittner: The Africa Summit 2018 was the first major relevant event that we attended. We held a series of one-on-one meetings there and got to know companies that subsequently supported us in getting a foot in the door in African countries. We now have our own branch of the Neulandt business unit in Ivory Coast, which sells mobile precast concrete factories, and we are involved in a number of projects in West Africa. I do not expect any major changes for our business due to the corona pandemic, because the megatrend urbanization and the corresponding need for affordable living space will only change in detail as a result. We are well advised to continue pursuing our strategy in African markets despite the corona crisis.
Shoe: In a current study, my institute is dealing with the effects of Corona on emerging markets, and we are assuming the hypothesis that Austrian companies will concentrate on the core markets. Many medium-sized companies are currently extremely challenged with their management capacities, and engagement in an African country in particular requires an above-average amount of management attention even at normal times. It has to be said: Emerging markets only play a niche role for Austrian companies, but are now affected in many ways: The informal economy accounts for more than 50 percent of economic output in some countries, and the budget budgets are very unstable to deal with such a crisis . African countries in particular are heavily dependent on external financing and have high budget deficits. For China, on the other hand, economic growth is forecast for 2020, so it is not surprising that - when I talk to companies about international markets - currently only China is actually being discussed.
How do you rate the involvement of domestic companies in emerging markets, and in Africa in particular? What contribution can the Austrian economy make to sustainable development?
Shoe: I would differentiate between four types. For one, we have Hidden championswho are active in the B2B area and there are relatively strong in mechanical engineering. Then there is the so-called project business. The third type are technical consultants who also play an important role in referring Austrian partners to international projects. And the fourth group are social entrepreneurs who work with local partners to develop specific solutions in these markets. Austria lacks the critical mass to make a significant contribution to achieving the sustainability goals: We have an export share of 1,3 percent for the whole of Africa! If we really want to get ahead here, we have to think more European - and also support the European economic model. Because it is often overlooked, but we are not alone there. There are established competitors, many of whom are from China.
Bittner: With a share of exports of just over one percent, African markets are in fact not the focus of Austrian companies. If you want to establish yourself there, it is crucial to establish a presence and understand these markets. But companies typically don't. Rather, they assume that products and services that work in the rest of the world are also suitable for these markets. That can be the case, but it doesn't have to be. European and especially Austrian companies could contribute an incredible amount. We have some industries that have very resource-efficient technologies. Developing countries in particular have the potential to make technological leaps in many areas. One of the factors that makes our precast concrete plant interesting is that we provide a technology that is not only efficient, but also generates added value in the respective country. In our industry, this is not the standard case: Usually, prefabricated parts are ordered from a European company, which they then deliver and assemble. Essentially, all of the money in such deals goes to Europe. But that's not sustainable in the long run. Our system, on the other hand, is intended to generate highly standardized mass living space directly on large construction sites. And that presupposes a corresponding quantitative need, which simply does not exist in Europe. In addition, the concept of prefabricated houses is hardly widespread in many countries, although it is one of the most productive construction methods. This enables us to create mass living space for people whose affordability limit is very low.
Engelberg: We have advanced technology and great companies. There are also other important building blocks: entrepreneurial spirit, financing, know-how, education, sustainability. You called it the European economic model. And we have to put these building blocks together with our African partners. Another issue, however, is that Africa is a blind spot for most companies - there is hardly any reference to African countries. And especially with regard to Africa, you are struck by the size of the continent, the amount of people - you almost get agoraphobia. We therefore have to do a lot of PR work in order to even bring such regions into the focus of business.
What specific support mechanisms are needed?
Shoe: I think the most important thing in African markets is market information. The data situation is poor, and the majority of Austrian companies in Africa pursue a pure export strategy and are not present on site. Success depends very much on choosing the right partner. Here is the system of Außenwirtschaft Austria a very good one in my opinion. I cannot understand the small-minded discussion about their benefits, because the added value is obvious to me. The foreign trade delegates obtain information, know the environment, political decision-makers, the bureaucracy and other influencers. This is particularly important for larger projects. Even if individual large companies no longer need this support, it makes a difference for most small and medium-sized companies. Many companies cannot establish their own local presence because the markets are too small and, compared to other regions, are far too poorly networked. Here the new pan-African free trade zone could become a game changer.
Bittner: I can confirm that, even though Umdasch is not a small company. With its foreign trade organization, the Chamber of Commerce was and is extremely helpful. Because even if the Neulandt Portable Precast Plant is primarily tailored to this type of market, in the end we went virtually blind to these countries. What also helped us was the exchange with other Austrian companies that are active in African markets. For example, we are in very good contact with Vamed. I was amazed to hear how many hospitals the Vamed has already built on the African continent. This type of exchange could certainly be further institutionalized.
Engelberg: On the one hand, it is important that we provide the best possible support to Austrian companies that do business in African countries or even want to invest there. And according to my perception, awareness of this is growing in Austria. Our development cooperation is also beginning to reorient itself. On the other hand - and this is particularly important to me - it is about communication and coordination. I already mentioned the need for PR. There is also a feeling that has been confirmed after numerous conversations: that there is still very little coordination in Austria on this topic. Everyone does a little, everyone has their own little playing field. One of my ideas was to install an Africa officer to get started here and to create a contact person and a platform that enables companies to explore opportunities for economic cooperation together with companies.
Vielen Dank für das Gespräch!
Martin Engelberg is since 2017 Member of the National Council the ÖVP and is area spokesman for international development.
Arnold shoe is director of the Competence Center for Emerging Markets & Central and Eastern Europe as well as assistant professor at the Vienna University of Economics and Business.
Werner H. Bittner is the managing director of Umdasch Group Ventures GmbH, the innovation forge of the Umdasch Group.